Annex G Carbon Assessment of the Capital Budget
Meeting our targets to achieve Net Zero greenhouse gas emissions by 2045 will require transformative action across all sectors of the economy and across society. The Scottish Government’s investment in publicly-funded infrastructure has a critical role to play in supporting the transition. The Scottish Budget 2022-23 sets out almost £2 billion of low carbon capital investment in Scotland’s public infrastructure – supporting the decarbonisation of our homes and buildings, transport and industry.
The Scottish Government currently uses a taxonomy approach to provide a summary carbon assessment of the annual Capital Budget. This approach allocates spending lines into three broad categories - Low, Neutral and High carbon. The categorisation is shown in the table below and was developed and proposed by the Low Carbon Infrastructure Taskforce in 2015.
|Low Carbon||Seen as necessary to the low carbon transition||Transport – bus, rail and ferry
Energy – all renewable generation and electricity transmission and distribution
Rural affairs and the environment – waste Housing – energy efficiency programmes
|Neutral||Do not represent substantial carbon efficiency gains in their own right but are consistent with low carbon ambitions||Rural affairs and the environment – all non-waste
Housing – all non-energy efficiency
Water, Digital, Health, Schools, Justice
Culture and heritage Regeneration
|High Carbon||Relatively carbon intensive||Transport – roads and airports Energy – fossil fuel generation|
The following table provides the percentage of capital spending in the Scottish Budget 2022-23 in Low, Neutral and High carbon categories compared with Scottish Budget 2021-22 (at introduction). The detailed tables that accompany this annex set out a line-by-line breakdown of how these percentages are calculated. In line with previous years, local government spending lines are excluded from the measure as we do not hold specific information on Low/Neutral/High carbon spend made by local authorities. The total also considers net Financial Transactions funding only. This makes the total budget being assessed lower than the overall capital budget.
The tables are available in Excel format in the supporting files of this publication.
To show like-for-like comparison between financial years, each spending line is taken from that year’s budget at introduction:
The total absolute spend in Low carbon investment by this method is almost £2 billion, increasing by over £70 million in 2022-23, the highest amount spent on low carbon capital investment. The overall capital budget under consideration has increased by over £487 million to £5.7 billion. Compared to 2021-22, there is a slight decrease in the percentage in the Low carbon investment category, due to the overall budget increase and increased spend in the Neutral category. In total, 92.7 per cent of capital expenditure is categorised as either Low or Neutral, an increase from 91.5 per cent in 2021-22 resulting in a reduction in the percentage of High carbon investment from 8.5 per cent to 7.3 per cent. These figures demonstrate early progress against the ambitions for low carbon investment as set out in the Infrastructure Investment Plan.
Investment in sectors classed as Neutral in the taxonomy has increased by £458 million. Programmes in the Neutral category are consistent with the Scottish Government’s emissions reduction targets and are likely to have a considerable share of Low carbon investment which is not easy to identify accurately. Examples of this are the Affordable Housing programme and the Health capital programme which are embedding low carbon initiatives within them but these are not separately identifiable and the programme as a whole is still classed as Neutral.
The following Low carbon projects have seen a substantial increase in investment for the upcoming year, and will be key to delivering the transition to a Net Zero emissions society and creating a greener Scotland:
- An extra £54 million on Active Travel.
- An increase of £74 million on Major Public Transport Projects.
- £47 million increase in Energy Efficiency spend.
- £20 million for the North East and Moray Just Transition Fund.
The share of High carbon investment has fallen between 2021-22 and 2022-23. The main areas of spending that fall into this classification relate to improving and maintaining our road and bridge networks, which is vital for the economy and connectivity, as well as road safety. There is also funding to help Highlands and Islands Airports Limited to improve links between airports in the region that helps crucial communications across our Highlands and Islands communities.
Following the 2019 Climate Change (Emissions Reduction) (Scotland) Act, The Joint Budget Review was established to improve budget information on climate change. The Joint Budget Review is being undertaken in collaboration between Scottish Government and Scottish Parliament officials. It aims to understand and reduce government spend that would ‘lock in’ future greenhouse gas emissions and align the budget and climate change plans. This work is currently underway and we have engaged the Fraser of Allander Institute to provide analytical support through a project that aims to deliver feasible and proportionate recommendations to improve scrutiny practices in the context of both the Carbon Assessment of the Capital Budget (this assessment) and the Carbon Assessment of the budget. The project will conclude in summer 2022.